On Sun, Nov 4, 2012 at 5:43 AM, Changaco <[email protected]> wrote: > > This is what the Relative Theory of Money calls "temporal asymmetry" (or > rather it would be if it got translated into English). In a monetary system > with a fixed mass, the first users get money for "free", and those that come > after have to "work" for them because they don't get any.
That's interesting. Do you know of a succinct English summary of this "Relative Theory of Money"? > That's part of what I meant when I said gold and Bitcoins aren't fair. The > other part being "spatial asymmetry", meaning that when there is money > creation it is not distributed equally either, because in Bitcoin we can't ID > people so we can't give one equal share to every participant. So, Coase's Theorem is that it doesn't matter how the resource is initially allocated if transaction costs are zero, but that it *does* matter if transaction costs are non-zero… and transaction costs are always non-zero! How does that theorem apply to this question? The transaction costs of Bitcoin are probably significantly lower than any comparable system, but of course it is never 0. Is the initial (more precisely the "early) distribution of Bitcoin important or unimportant to the ongoing function of the economy? I tend to lean to the "unimportant" side, although I admit that I really don't know (and I don't think anyone else does either). I'm actually very concerned about the opacity and unpredictability of the Bitcoin aggregate Monetary Base. (Unlike, as far as I can tell, all the other Bitcoin enthusiasts.) But I'm not concerned about "unfairness", unearnedness, or a strongly unequal distribution of wealth *per se*. > A currency can't be both a long term reserve of value and a good medium of > exchange, because the former encourages hoarding instead of trade. Since > we're talking about file sharing and not life savings, there is no reason to > choose a monetary system that allows long term hoarding. This, I don't really agree with. I know it is a common belief among certain schools of economics, and I admit the theoretical soundness of the Paradox of Thrift, but I'm not really convinced that it is a sufficiently important problem in practice, nor that an inflationary currency is a solution to the problem whose benefits outweigh its costs. I mean: maybe! But maybe not. Who knows? How can one tell? All ex post facto empirical observations are inextricably entangled with confounders. In particular, I personally suspect that the *predictability* of a monetary policy is at least as important as what that policy actually is (today). Bitcoin (or perhaps some successor to Bitcoin that fixes some flaws) could have a policy about the aggregate monetary base that is predictable in a way that no other currency is. I don't like the word "hoarding", because it is an emotionally laden word without, as far as I understand, a specific meaning different from "saving". "Hoarding" is you saving money (or other resources) when I think you shouldn't. "Saving" is you hoarding when I think you should. Anyway I admit that you're basically right if you put it like this: a currency can't be *optimal* for long-term savings and optimal for a medium of exchange, but I'm not at all sure that this implies a single currency can't be *good enough* for both. I also kind of think that: (a) It isn't just that any one currency can't be optimal for both, it is that it is impossible to optimize both simultaneously in any way! That is: it wouldn't matter if you had two currencies, or a million currencies (hello, Ripple), or any other system, you still couldn't simultaneously optimize both savings (and the associated safety/robustness) and growth. (b) I'm skeptical of the idea that it is better to tune this trade-off further toward the growth side and further away from the savings side — by use of an inflationary currency — than to use the setting that results from having a non-inflationary or deflationary currency. The theoretical insight of the Paradox of Thrift is certainly a fascinating and provocative observation (namely, that the aggregate utility of everyone in the society is increased if they are somehow coerced or tricked into spending more than their individual self-interest would dictate), but it seems far too abstract and speculative a guide to improving the fortunes of a real, complex and dynamic, economy. Thanks for the conversation! Regards, Zooko _______________________________________________ p2p-hackers mailing list [email protected] http://lists.zooko.com/mailman/listinfo/p2p-hackers
